New South Wales: what to check before you exchange on a home

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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In New South Wales, a home purchase becomes binding at one moment: the exchange of contracts. NSW Fair Trading describes the stage before it plainly. Until contracts are exchanged the agreement is usually not binding and either party can change their mind. After exchange, the buyer is committed, with one limited way out for some purchases and none at all for others. That is why the checks a buyer makes are bunched into the days before exchange, and why it matters to know what each one does and does not tell you.

This guide walks through those checks as the New South Wales government describes them: the contract itself, the building inspection report, the separate pest inspection, the extra checks a standard report leaves out, the strata records and the section 184 certificate for apartments and townhouses, and the cooling-off period that sits behind a private treaty purchase. It covers New South Wales only. Other states and territories have their own rules, and none of what follows should be carried across a border.

NSW Fair Trading and NSW Department of Customer Service buyer pages, last updated 22 September 2025.

Why the checks come before exchange

Fair Trading sets out what exchange involves. There are two copies of the contract of sale, and each party signs one. The copies are then swapped, by hand or by post, usually arranged by the solicitor, the conveyancer or the agent. A deposit is paid at that point. Settlement, when the balance is paid and the buyer becomes the legal owner, usually follows about six weeks later.

Everything that could change a buyer's mind therefore needs to be known before the swap. Fair Trading's list for this stage is short: review the contract with a solicitor or conveyancer, make inquiries about the property, and arrange finance. The inspections and strata searches described below are the "inquiries" part of that list. The NSW Department of Customer Service says a building inspection is usually carried out before contracts are exchanged, for the same reason.

The order matters more for some buyers than others. A private treaty buyer in New South Wales has a cooling-off period after exchange, so a late report can still be acted on, at a cost. An auction buyer has no such period. Both cases are covered further down.

Start with the contract of sale

The contract exists before the property is advertised. According to Fair Trading, a contract of sale must be prepared by an Australian lawyer or a licensed conveyancer before a residential property can be marketed, and it holds both the terms of the sale and what the regulator calls valuable information about the property.

The Department of Customer Service lists what a buyer should look at in it before making an offer, whether the sale is by private treaty or by auction:

• the deposit amount and the date it is due;
• the settlement details;
• the title documents, including the zoning certificate and the drainage diagram;
• the special conditions, such as whether the property is sold vacant or tenanted;
• the inclusions, meaning what stays with the property.

For a strata property two more documents sit in the contract. Fair Trading says the seller must include a copy of the strata plan, and a copy of the by-laws must be attached. Both are discussed in the strata sections below.

One practical rule is worth knowing early. A real estate agent cannot change any part of the contract. Only the buyer's or the seller's solicitor or licensed conveyancer can, and Fair Trading says the buyer's legal representative should confirm any change with the vendor's legal representative. A buyer who wants a longer settlement, a different deposit date or a condition added is asking for a change that passes between the two legal representatives, not one that can be agreed with the agent at an open home.

What a building inspection report covers

A building inspection report, sometimes called a standard property report, is a written account of the property's condition. The Department of Customer Service says it covers significant defects, and gives rising damp, wall cracking or movement, safety hazards and a faulty roof as examples. Its purpose for a buyer is to find costly problems before committing, and the department notes it can also be used in negotiating the price.

Who writes it is the buyer's choice, within limits the department describes. The report should come from a suitably qualified person, such as a licensed builder, a surveyor or an architect, who holds adequate insurance, in particular professional indemnity insurance. An Australian Standard applies to pre-purchase building inspection reports, but the department points out that it does not govern their style or content. Two reports on the same house can therefore look quite different. The government pages read for this guide do not give the standard's number.

The inspector should look at every accessible part of the property. That means the interior and exterior of the building, the roof space, the under-floor space and the roof exterior. It also means the site: the garage, carport and shed, a separate laundry or toilet, small retaining walls, steps, fencing, surface water drainage, stormwater run-off, paths and driveways. A buyer can ask for some items to be added, and the department's examples are visible asbestos, an operable safety switch and operable smoke alarms.

The finished report should name the buyer and the property, give the date and the scope of the inspection, and summarise the overall condition, the major faults and the significant problems that need repair. Just as usefully, it should list any area or item that was not inspected, say why, and recommend any further investigation. The department's list of specialists a report may point to includes a pest inspector, a structural or geotechnical engineer and a surveyor. A sentence saying the under-floor space could not be reached is not a formality: it tells the buyer that part of the house is still unknown.

What a standard report leaves out

The limits of a standard report are spelt out by the department, and they are wider than many buyers expect. The report does not cover parts of the property that could not be inspected, matters outside the consultant's expertise, estimates of repair costs, minor defects or the detection of termites. A buyer who wants a costed list of repairs, or a list of minor defects, needs what the department calls a special-purpose report, and has to ask for it.

The department also lists what inspectors do not normally check. The list includes footings, concealed damp-proofing, electrical wiring and smoke detectors, plumbing, drainage and gasfitting, air conditioning, swimming pools and their equipment, fireplaces and chimneys, alarm systems and most appliances. A clean report says nothing about any of these.

It is also not a legal document about compliance. In the department's words of caution, a building inspection report is not a certificate that the property complies with any law, warranty or insurance policy. Whether a structure was lawfully built is a question for the legal inquiries, not for the building consultant.

Three of the gaps get their own warnings from the department.

Electrical safety. The department notes that more than 300 people each year are admitted to hospital because of electrical problems in their homes. An electrical inspection may be included in a building inspection, and where it is not, the department suggests a licensed electrician.

Swimming pools. The buyer should check that a pool is fenced and compliant. Unless the seller fixes any issues and obtains a compliance certificate before settlement, a non-compliant pool becomes the buyer's responsibility, typically within 90 days of settlement.

Loose-fill asbestos. It cannot be identified by sight, so a building report will not confirm it. Only a test by a licensed asbestos assessor can.

Why the pest inspection is a separate job

The distinction the department draws is between damage and activity. A building inspection identifies visible termite damage. It does not establish whether termites or other timber pests are still present. For that the department says a separate pest inspection should be arranged, especially in areas where termites are a known problem.

The two inspections answer different questions, so one does not stand in for the other. A building report that mentions old termite damage in a subfloor, with no pest report alongside it, leaves the most expensive question open: whether the problem is finished or continuing.

The government pages read for this guide do not name a standard for pest inspections and do not give typical prices for building, pest or strata reports. Fees are set by the consultants.

Earlier reports and the vendor's own report

A buyer is not always the first person to have had the property inspected. In New South Wales the agent must tell a prospective buyer about previous inspection reports on the property; the Department of Customer Service places this at the point where the buyer asks for the contract of sale. Fair Trading adds that the buyer may be able to negotiate a lower price to buy an existing report rather than commission a new one.

Sometimes the vendor supplies a building report directly. The department's view is measured: a vendor's report can help, but it does not replace an independent one. The same applies to strata properties, where Fair Trading says existing pre-purchase reports may be available from the agent and still recommends that buyers get their own.

Timing is the other constraint. Most consultants need at least two to three days' notice, and the department advises getting the vendor's permission for the inspection as early in the negotiation as possible. A buyer who waits until a price is agreed may find the inspection cannot be done before the vendor wants to exchange. That pressure has limits on the agent's side, too. Fair Trading states that agents must not use high-pressure tactics, harass buyers or engage in unconscionable conduct, and gives the example of calling straight after an inspection and demanding an offer by the end of the day.

Strata: the records behind the front door

Strata is a large part of the New South Wales market. Fair Trading counts more than 85,000 strata schemes in the state and says 40% of people in greater Sydney will live in strata by 2040. Buying into one means buying two things at once. The buyer owns the interior of the lot, which Fair Trading calls the lot airspace, and shares ownership of the common property with the other owners. Unit entitlement, shown on the strata plan for each lot, sets the buyer's share of the costs and their voting power in the owners corporation.

This changes what a physical inspection is worth. For strata and company title properties, the Department of Customer Service says the building inspector normally looks only at the interior and the immediate exterior of the unit. Common property, which Fair Trading says may include shared gardens, external walls, roofs, driveways and stairwells, falls outside that inspection, and a report on it is a special-purpose report that must be requested. The larger source of information about the building is its paperwork.

A strata search report draws on the scheme's records. According to Fair Trading it covers:

• the scheme's finances;
• its insurance, and when that was last checked;
• building defects and planned works;
• safety requirements;
• existing or pending legal matters;
• meeting notes, which show how the scheme is run and any disputes.

A buyer has two ways to get this. One is to hire a professional strata searcher or a conveyancer, and Fair Trading suggests comparing several quotes on cost, delivery time, contents and experience. The other is to inspect the records personally. That needs the seller's permission, obtained through the agent, and a fee paid to the owners corporation; the agent can supply the details of the strata manager or the secretary.

The by-laws deserve a read of their own, because they govern daily life in the building: Fair Trading mentions pets, the approval process for changes to a lot, parking and where children can play. By-laws cannot be harsh, excessive or oppressive, and cannot conflict with any law. The NSW Civil and Administrative Tribunal can reject by-laws that break those rules, but a buyer who reads them before exchange knows what the building currently expects.

The section 184 certificate and the levies

The section 184 certificate is the owners corporation's own statement about a lot. It is requested from the owners corporation for a fee, which Fair Trading's page does not state, and it is issued by a strata committee member or the strata managing agent.

Beyond the levies, Fair Trading lists what else the certificate shows: the names of the committee members, the managing agent and the building manager, where the records can be viewed, by-laws made in the previous six months and not yet lodged, whether a strata renewal committee has been set up, and whether the scheme has an embedded network and what service it provides.

The certificate also carries a protection. Fair Trading states that if a levy is outstanding and is not shown on the section 184 certificate, the purchaser is not responsible for paying it. The certificate is therefore more than information: it fixes what the buyer can be asked to pay for the lot's past.

Reading it needs some background on how levies work. All owners pay levies to the owners corporation, usually quarterly. The administrative fund pays for day-to-day costs such as gardens, maintenance and strata management fees. The capital works fund pays for major work such as roofing, lifts or fencing. Every scheme must have a 10-year capital works plan, and where the funds fall short for large or unforeseen costs, special levies may be raised from the owners. Fair Trading adds a warning that runs against instinct: low levies can lead to steep increases later. A low quarterly figure is good news only if the capital works plan and the fund balance, both visible in the strata search, support it.

Brand-new schemes have their own checkpoint. During the initial period the developer acts as the owners corporation. That period ends when at least one-third of the unit entitlements are sold, and the first annual general meeting must be held within two months after it ends, with the scheme documents handed over at least 14 days before the meeting. Fair Trading says a developer who misses either deadline faces a penalty of up to A$11,000, plus A$220 for each day. A buyer in a young building can ask whether that first meeting has been held.

The cooling-off period as a safety net

For a private treaty purchase of residential property in New South Wales, the law gives the buyer a cooling-off period of five business days after exchange. Fair Trading describes it precisely: it starts on exchange and ends at 5pm on the fifth business day after the day of exchange. During it the buyer may withdraw from the contract by giving written notice.

Withdrawing is not free. The buyer forfeits 0.25% of the purchase price, which Fair Trading expresses as A$250 for every A$100,000. The Department of Customer Service confirms that inspections can be done during cooling-off, and that withdrawing after an inspection still costs the 0.25%. The period is a way out of a bad purchase, not a free trial.

The period is not the same for every purchase, and it can be changed. Off-the-plan contracts carry 10 business days, which Fair Trading explains by their size and complexity. The standard period can be reduced or extended by written agreement with the vendor. It can also be given up altogether: the buyer waives it by giving the vendor what Fair Trading calls a 66W certificate, and the regulator advises seeking advice before doing so. A buyer who waives cooling-off is in much the same position as an auction bidder: there is no period after exchange in which to act on a late report.

What agents must do while you check

Several rules of conduct protect a buyer during the checking period, and all come from Fair Trading's guidance on making an offer.

When a buyer asks what a property is expected to sell for, the agent's answer cannot be lower than the estimated selling price in the agency agreement. This gives the buyer a floor for deciding whether the property is worth the cost of reports at all.

An offer made does not disappear while the reports are pending. Agents must pass all offers to the vendor until exchange, unless the vendor has instructed otherwise in writing. The reverse is also true: other buyers' offers are passed on as well, so an accepted offer is not secure until contracts are exchanged.

An expression of interest deposit does not change that. According to Fair Trading it does not take the property off the market. It is refundable, and it must be repaid within 14 days if someone else enters a contract for the property. A buyer who pays one while waiting for a building report has shown good faith, not bought time.

Before settlement, and if repairs follow

Two points on the government pages reach past exchange. The first concerns land tax. Fair Trading says a buyer can ask the seller for a land tax clearance certificate before the sale is finalised, because outstanding land tax may need to be paid during settlement. It appears on the regulator's auction page, where there is no cooling-off period in which to discover the problem later. The second is a final look at the property itself: Fair Trading suggests inspecting it on the morning of settlement to confirm it is in the same condition as it was at exchange.

The other point is what the reports lead to. If an inspection finds work to be done and the buyer goes ahead, the Department of Customer Service sets out the New South Wales rules for the repairs. Work valued at more than A$5,000 needs a builder or tradesperson licensed for that work and a written contract. For jobs over A$20,000, a Home Building Compensation Fund certificate must be provided before any deposit is taken, with some exemptions. These thresholds do not affect the purchase, but they shape what a defect found in a report will involve once the buyer owns it.

If a report itself turns out to be wrong, the department's suggested path is to raise it with the consultant first, noting that members of industry associations may have access to a free complaints service, and to seek legal advice where undisclosed problems cause significant losses. How any of this applies to a particular property depends on the contract and the facts, which is the work of the buyer's solicitor or conveyancer.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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